The following is a summary of the real estate provisions of the Tax Cuts and Jobs Act (TCJA) signed into law by President Trump on Dec. 22, 2017.

Individual Rates (Temporary)

General tax rate and bracket reductions for individuals (top rate of 37 percent applies to income above $600,000 for joint filers, $500,000 for single filers). Increases the AMT exemption level and AMT exemption phase-out level. New rates and AMT rules expire after 2025. The 3.8% net investment income tax remains in effect.

Itemized Deduction Limit (Temporary)

Miscellaneous itemized deductions, previously subject to the two percent floor (e.g., investment management fees), are no longer deductible. Expires after 2025.

Corporate Tax Rate (Permanent)

Flat 21 percent tax rate for C corporations; repeals the corporate AMT.

Disallowance of Deductions for State and Local Income Tax and Property Tax (Temporary)

  • Limited to $10,000 per year.
  • No limit for real property taxes paid or accrued in connection with a trade or business. However, state income taxes that are payable by a non-corporate investor in a pass-through entity are subject to this $10,000 aggregate deduction limitation. For example, assume that Jeff is a 50 percent member of an LLC which owns an office building in Illinois. The LLC pays $200,000 in real property taxes, and has total net income of $500,000. Jeff’s 50 percent share of the property taxes ($100,000) is fully deductible for federal income tax purposes, but the Illinois income taxes that he pays on his 50 percent share of the net income (the state tax on his $250,000 share of the profits), along with (i) any other state income taxes he pays and (ii) any real property taxes he pays that are not associated with a trade or business, are subject to the $10,000 limit on state and local taxes that would be allowed as a deduction
  • Expires after 2025

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Photo of Sanford C. Presant Sanford C. Presant

Sanford C. Presant, Co-Chair of the firm’s Global Real Estate Fund Practice, focuses his practice on providing fund and joint venture best practice business and tax structuring advice to sponsors of the leading real estate private equity funds, qualified opportunity zone (QOZ) funds,

Sanford C. Presant, Co-Chair of the firm’s Global Real Estate Fund Practice, focuses his practice on providing fund and joint venture best practice business and tax structuring advice to sponsors of the leading real estate private equity funds, qualified opportunity zone (QOZ) funds, REITs, and their local partners and investors in the U.S. and internationally.

Sandy has more than 30 years of experience as a tax and business lawyer for major funds and real estate companies. He has structured and negotiated the tax and business aspects for leading industry QOZ funds, over 100 real estate funds (including their internal general partner structuring and executive compensation) in the U.S., Europe, Latin America and Asia, and more than 500 joint ventures (partnerships and LLCs), including QOZ subsidiary JVs (QOZBs), as both a corporate and tax attorney. Sandy was the National Co Chair – Real Estate Fund Services at Ernst & Young from 2000 – 2005 and was Chair of DLA Piper’s Real Estate Fund Practice. Sandy is a prior Chair,  American Bar Association Partnership Tax Committee, and is a member of the NAREIT Government Relations Committee and the Tax Policy Advisory Committee (TPAC) of the Real Estate Roundtable.

Sandy served as National Chairman of the American Bar Association’s Committee on Partnership Taxation, is a member of the ABA Task Force on Debt Restructurings and Bankruptcy, and chaired the ABA Task Forces on Publicly Traded Partnerships and Partnership Tax Allocation Rulings. He is on the Tax Policy Steering Committee of the State Bar of California, on the advisory board for California CEB’s Advanced Tax Planning for Real Estate Transactions, on the Board of Advisors of the Loyola Law School Tax LL.M. Program, and is a member of the Advisory Board for CCH’s Journal of Passthrough Entities. He has been a regular guest commentator on the PBS program The Nightly Business Report and was a presenter at the 1993 California Economic Summit. For 15 years, Sandy was an adjunct professor at New York University’s Real Estate Institute. He speaks annually at a number of the principal tax conferences throughout the country.

Sandy was a program director of the 2003 NAREIT Law and Accounting Conference. He currently is a Co-Chair (and founder) of PLI’s Annual Real Estate Tax Forum in New York. He is the co-author of the two-volume treatise Tax Aspects of Real Estate Investments. In 2007, he was named a California Super Lawyer, as the result of a joint research project by Law & Politics and Los Angeles magazines. He is listed in The Best Lawyers in America.

Sandy has substantial experience in structuring funds and joint ventures to minimize UBTI, including the use of blocker structures reducing the withholding and tax for cross border investors and tax-exempts, public and private REITs, hotel net lease structures that minimize leakage, and fractions rule compliant structures.

Photo of Jennifer H. Weiss Jennifer H. Weiss

Jennifer H. Weiss focuses her practice on structuring, negotiating, and documenting complex tax oriented commercial transactions, primarily involving real estate, real estate securities, and capital market transactions. She represents traded REITs, public non-traded REITs and private REITs, and real estate operating companies, and…

Jennifer H. Weiss focuses her practice on structuring, negotiating, and documenting complex tax oriented commercial transactions, primarily involving real estate, real estate securities, and capital market transactions. She represents traded REITs, public non-traded REITs and private REITs, and real estate operating companies, and is involved in most aspects of their portfolio acquisitions and dispositions, fund formations, joint ventures and strategic alliances, as well as the formation, qualification, and operation of REITs for federal income tax purposes. Jennifer also represents public, private, and institutional taxable and tax-exempt clients structuring collective investment and reinvestment vehicles, real estate securitization, equity and debt investment structuring and restructuring, work outs, and venture capital transactions on a tax-deferred basis, including all aspects of investments in pass-thru entities.